With the hype around artificial intelligence showing few signs of slowing down, one analyst has spotted some warning signs that a correction may be coming. Richard Windsor, a senior technology stock analyst and founder of the research company Radio Free Mobile, warned in a research report titled “The Magic Money Tree” that money is flowing into the field of artificial intelligence. In the field of intelligence, people rarely pay attention to the fundamentals of the company.” This obviously shows that when the music stops, there are not many chairs available. ” He outlined three things that have recently caused him concern: Cohere valuation First, generative artificial intelligence company Cohere is reportedly expected to raise funding at a $5 billion valuation. That’s nearly double its valuation last June, At the time, the startup had raised $270 million at a $2.2 billion valuation. Windsor described this as “…the latest sign of reckless abandonment.” He said in a March 28 report: “Despite Cohere’s 2023 Annual revenue is just $13 million, but its valuation will now reach $5 billion.” He said the company’s “valuation is equivalent to a historical price-to-sales ratio of 384x, which shows that investors have a bad case of FOMO (fear of missing out). situation and are pouring into anything related to artificial intelligence.” Cohere, which is backed by Nvidia and founded by former Google artificial intelligence researchers, is betting on generative artificial intelligence for enterprise use, company president Martin Kon recently told CNBC. Not a chatbot. Inflection AI deal Windsor, who spent 11 years covering global technology at Nomura Securities before starting his own company, raised another “red flag”: Microsoft’s apparent deal with Inflection AI. “Another red flag is Microsoft’s ability to hire the CEO and 70 employees from artificial intelligence startup Inflection AI,” he said. “Things are not going well for Inflection AI because if the company performs well, Microsoft’s advances will quickly be rejected.” Tech giant Microsoft reportedly agreed to pay Inflection AI around $650 million in cash, allowing it to Hiring the startup’s employees and using its technology has been called an “unusual deal.” Windsor highlighted the “FOMO effect” surrounding artificial intelligence, noting that even tech giant Amazon is not immune. He said: “Amazon has committed another $2.75 billion of the total $4 billion to Anthropic, and I am very certain that Amazon will eventually acquire the company.” One of Amazon’s largest investments in history will be to continue to invest in the generative artificial intelligence company. Funding was poured into the startup, which has a chatbot called Claude that competes with OpenAI’s ChatGPT. Stocks you’re ‘forced’ to buy “The mania is still going on, but I’m very happy to stay away from it,” Windsor said of the artificial intelligence industry now. Windsor said he would acquire Nvidia if “forced” to enter the field, noting that the U.S. chipmaking giant has so far been the main beneficiary of artificial intelligence hype. The stock is up about 80% year to date and 240% in the past 12 months. “Nvidia is really the only company making real profits from the current generative AI investment boom, but when the correction comes, Nvidia will have nowhere to hide, although I suspect it will be much less harmed.” Also. There are a lot of other people,” he said. He added that he already owns chip stock Qualcomm, which is “very well positioned to benefit as generative artificial intelligence starts to be implemented at the edge.” —CNBC’s Kate Rooney contributed to this report.
